Market Outlook

As reported in the semi-annual survey by the Japan Real Estate Institute (JREI) and BAC Urban Projects, rental growth in Tokyo’s prime retail submarkets on the whole was impressive during 2H/2019. Average 1F rents increased by 4.9% half-year-on-half-year (HoH) and 14.9% year-on-year (YoY). As for Non-1F rents, growth in this sector has yet again exceeded its typically more volatile 1F peer, rising 8.8% HoH and 15.9% YoY. As such, for the first time, non-1F rents in all submarkets sit above JPY30,000 per tsubo per month. At the submarket level, 1F rents in Ginza remain streets ahead of rivalling districts, whilst the spread between average non-1F rents remains tight.

The COVID-19 pandemic continues to depress office rents during the month, with rents in Central and Admiralty dropping 18.6% and 22.2% YoY, respectively, extending the decline to 11 consecutive months. With current rents adjusted significantly downwards, cost-conscious occupiers started to seek bargain deals in the down market, triggering more leasing activity than in the previous month. In Island East, however, as office vacancies remained at a low level (Quarry Bay: 0.5%, North Point: 5.1%), rents in the area remained stable.
 

The effects of the continuing COVID-19 pandemic were of course the main factor impacting the Asia Pacific property market in the first quarter. Signs of the outbreak weighing on sentiment were seen in markets across the region, however robust government stimulus packages and policies are cushioning impacts, and opportunities are emerging across many sectors in the region. In Hong Kong the virus exerted further downward pressure after a prolonged period of political and economic uncertainty, keeping major players on the sidelines. Similarly in Singapore uncertainty has begun to limit activity in both the residential and commercial sectors. Private equity inflows into India’s real estate market have slowed to a trickle and investments in dynamic emerging markets like Myanmar have been put on hold.

From the fall of 2016, moderate expansion of Japan’s economy has continued. However, in 2018, the economy shifted to a stagnant trend and subsequently to continuous moderate slowdown since 2019 with a recession all but certain by the end of the year. Signs indicating a turnaround in the for-sale/transaction market for real estate in Japan, for example the decline in the contract rate of for-sale real estate and the bottoming out of transaction yields, have become conspicuous. It appears that the market has already peaked. The conditions of Japan’s real estate rental market continue to improve. However, a turnaround has become apparent in terms of hotels and retail facilities, suggesting that the market will turn toward recession with some time lag.

The region’s key long-term investment attributes remain in-place:

– Economic Growth & Business Expansion

– Infrastructure Investment

– Increasing Connectivity

– Virtuous Cycle Between Income and Consumption

新型コロナウイルス (COVID-19) が世界中で広がり続けている中、消費者による消費、生産、流通は多大な影響 を受けており、消費財及び小売 (CG&R) 業界で事業を行う企業の課題は増加している。ラグジュアリー及びフ ァッション、食品及び飲料、化粧品、耐久消費財及び電子機器からホテル、リゾート、観光まで、あらゆる業 界のサブセクターに属する企業は、多くの重大な経営上及び法律上の問題に直面している。本チェックリスト は、CG&R企業が急速に変化する状況を切り抜けるための一助となることを目的とした、新興リスクと可能な解 決策のチェックリストである。 

緊急事態宣言の発令以降、大都市圏の多くの企業が急速なテレワークへの切替えや事業体制の見直しに追われる一方、3 月決算企業では決算・監査対応を中心に多くの課題が生じるなど、事業への影響は日々拡大しています。多くの海外地域においては引き続き厳格な外出制限や営業禁止等のロックダウン措置が継続している一方、一部地域においては行動制限の軽減・解除に向けた議論が始まるなど出口戦略の模索も始まりつつあります。

4 月 7 日に新型インフルエンザ等対策特別措置法に基づく緊急事態宣言が発出され、国内の感染対策は新たなフェーズに入りました。多くの海外地域においては厳格な外出制限や営業禁止等のロックダウン措置が継続している一方、4 月 8 日には中国武漢市の封鎖が解除されるなど、一部地域においては収束に向けた兆しも見え始めています。本ニュースレターでは当事務所の海外オフィスと連携して速報ベースで各国の方針や影響拡大状況の概要につきお知らせ致します。なお、本ニュースレターは感染拡大が続く間、不定期に配信していきたいと思いますが、同感染症の拡大状況については日々状況が変化している中、本ニュースレターの内容がその後変更・更新されている可能性については十分ご留意の上参照ください。本ニュースレターの内容は、特段記載のない限り、日本時間 2020 年 4 月 8 日夜時点で判明している情報に基づいています。

Hong Kong Office Market Overview 
1. Rental declines accelerated; core areas the hardest hit 2. Demand in Q1 shrinks by most in 18 years; absorption to remain negative over the near-term 3. Availability climbed to 10-year high; to stay in double-digits in 2020 4. Weak leasing demand to continue; cost constraints to limit relocations 5. Core area rental decline to accelerate; Greater Central rents in 2020 to retreat the most since GFC

Indian real estate sector, which was already struggling to re-emerge from the past turbulence of structural changes, policy reforms, and the liquidity crisis, is now set to witness another major fallout. In usual times, the ongoing period normally sees an uptick in residential real estate activities owing to festivals like Ugadi, Gudi Padwa, Akshaya Tritiya and Navaratri when new launches and housing sales spike up. Upcoming vacation time for Indian schools beginning April till June-end also gives time to homebuyers to make purchase decisions.